Court sides with health system, ruling HRSA's 340B patient definition is 'too narrow'

The Health Resources and Services Administration's definition of who qualifies as a patient under the 340B drug pricing program is too narrowly defined, a federal judge ruled Nov. 7.

The lawsuit was brought on by Kennett Square, Pa.-based Genesis Healthcare, a provider and participant in the government's 340B discounted drug program — until a 2017 audit conducted by HRSA led to the system being told it no longer qualified. 

HRSA later added Genesis back as a participant, but insisted the health system adhere to its definition of who qualifies as a "patient." 

However, according to court documents, "while Genesis Healthcare's initial request for reinstatement was satisfied by HRSA's subsequent action voiding its audit findings … because Genesis Healthcare continues to be governed by a definition of 'patient' that, it maintains, is illegal and harmful to it, … there remains a live controversy between the parties."

Now in an upset, the latest ruling sided with Genesis Healthcare's assertion that "patient" was too narrowly defined, finding that HRSA's definition "placed no such limitation on patient eligibility and omitted the language requiring the individual to receive the drug or biological 'as a patient of the covered entity,'" the Nov. 3 South Carolina District Court decision reads

The court also noted that it is clear that Congress was aware of potential issues related to a broad definition of "patient," had the tools to more clearly define it, but chose not to. 

Hospital and pharmacy groups including 340B Health and the American Society of Health-System Pharmacists have come out in support of the latest decision. 

"While the decision affirms that the agency has the authority to issue and act on guidelines based on their interpretations of federal law, it also makes clear that HRSA must be consistent when enforcing its interpretations," Maureen Testoni, president and CEO of 340B Health stated in a news release. "Here, the judge found that HRSA was enforcing language that was not included in any of its published final interpretations, causing the court to enjoin HRSA enforcement in this case."

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